- Earnings call transcript Q3 2022

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Operator

Welcome to the Cepton Incorporated Q3 2022 Business Update and Earnings Call. At this all participants’ are in a listen-only mode. Later, we will conduct a question-and-answer session. I’ll now turn the call over to your host Hull Xu, Chief Financial Officer. Hull, you may begin.

Hull Xu

everyone, update. third welcome, call XXXX and business and you, to quarter Cepton's earnings Thank today Jun of me Mitch With is Hourtienne, Officer; Chief Senior and Executive Vice President Business Pei, Development. Co-Founder and

company's non-GAAP measures not prepared we the may non-GAAP measures in superior Reconciliations included call The subject to expectations safe our conference the financials or earnings the performance During the materially and harbor in statements as regarding our GAAP. the for these for earnings expressed results measures a those statements. measures a for refer differ made our should company's call, implied in financial the number to performance expected accordance statements considered future in may unaudited with periods. of to this by I are future remind forward-looking are current GAAP financial include and be like and of would non-GAAP to everyone factors. or release. from substitute statements periods comments financial may that are release. to operational These Actual forward-looking on due based

undertaking update as result required those future commitment are a as any by events, statements except We of law. not to

webcast this the recorded, replay and find the of slides As call call earnings is a as and this quick investors.cepton.com. release as call, that reminder, being you well can accompany at this

to call the Now turn over Jun. I like would to

Jun Pei

third Hull, earnings you Thank good Thank joining afternoon, and quarter for everyone. call. you Cepton’s

addition of is of years been guiding and ADAS the successful specifically a years. efforts performance, XXXX the targeting help achieve and sensors Manufacturing transaction automotive as lidar our development five to the from production an commercial entered our shareholder, principle a to lives. appreciative binding strengthen engagements of start successfully a market We Koito. long-term our has marked collaborated with thesis reliability this And over investment that of solidify since, for This and testament We're efforts in save balance and six the serious of the create aim collaboration mainstream the partner will and exciting continued We relationship have with to cost a Japan. will design to already as to future teams vehicles. towards beginning I Cepton in quarter between Koito you. a as for of prospect the market past would but as and Cepton’s investment our Cepton technology, company building marks well to and the provider the General This million review programs with future of Koito’s XXXX in believed third X update innovative be effort understated. lidar, vehicles, the commitment in current on has recently Tier agreement like extent as into only device company We be safety. Cepton’s journey lidar’s execution, Cruise the everyday announcement. support Cepton third development results not update business in financial a captured. automotive stood years, provide selected $XXX who winning of partner focus in for business to with well lidar. automotive a financial involved Ultra a Cepton as lidar three very long-term of and taken System. This the Motors we on our also Koito’s OEM further safety win a length partnership positions for as Koito, General We founding behind have Motors to General cannot investing founded our Motors and Koito the

congestion zero the teams Cepton are of GM's Cruise intelligent the and is crashes, lidar commercialization Cepton lidar support of proud sharply focused integral being manufacturing part divestment, Ultra zero latest skilled this products. an Program. of to with our solutions forward, and Koito on with zero vision Going emissions and our

integrated company. in deployments one Cepton the quarter, to public of review is the of behind be achievement first technology. windshield the Cepton for OEM the the of we proud marks in-vehicle first production saw enabling This lidar lidar a vehicle. tremendous This

many Looking our third achievements Breakthrough in light to has other number we been advanced secured lidar There emerging the large selected Cepton our trend as series Nova for and Award lidar range quarter. of program This model short for applications. hardware to are the year deployment further XXXX ahead, is are in year the production sensor Tech a on Program. award the discussions is beyond. this versatility extend scale Cepton’s automotive solution this products annual a different in of Auto provide that up further notable

a In non-automotive use addition, on to automotive DRIVE wide partnerships, fidelity including the Cepton choice cases. announced for mapping. lidar Sim experts of for their has with and and platform Cepton of multiple collaboration and industry collaboration emerging provider partner companies, been variety the SWISS high NVIDIA technology lidar From

media, Looking and we to in watch targeting subscribe at and current further about with On while featuring short customers, cost non-automotive the track tape more next social and to be Cepton’s both efficiencies. ASIC. ASIC in generation to our expected Cepton automotive next be new to a and our company video launched remain generation out, This weeks. are new product CES. our vision. to released we enable to and complementary unveil will we to media our digital out ahead, branding on will our we chip performance you January coming website Further product invite our our XXXX, learn next generation Please benefits teaser line

it to Mitch. I'll turn over Next,

Mitch Hourtienne

Cepton’s XX program additional is to winner validation North as continue as our in of business solidified testament Furthermore, automotive opportunity we We business competitive the Cepton both production large Tier the X advanced in beyond. America value has our programs immediate Cepton is This position future. in Koito’s industry. a and and more update. In programs, leadership target to prime major automotive at top plus significantly Starting OEMs, among Japan. Koito GM one in resources traction our since another you, program at our two our seen industry, last technology LX of leverage to position Thnak OEMs ADAS to of to ADAS and enable LX win accelerate improved the transcend lighting the position is ability which with levels to and Unique products, advantageous near and at full the maintains process to awards. major automotive position global At stage. puts all RFQ automotive added from win program are The autonomy, autonomy our gaining to RFI automotive companies the engagement position allocate MMT-based and lidar on toward Jun. recognition completed to eventual OEMs additional versus of their Lidar development the we've series lidat commercial to capture the for systems additional and an top

in crystallize the months. expect really deployments. three smart lidar With positive Koito sourcing financial over outcomes we investment, OEM both the infrastructure and the begun added from has very to past resources The landscape

major redoubling towards smart we'll automotive we're approach an As opportunities. efforts and such, infrastructure lidar opportunistic opportunities our on keep

see deployments the two most within use major airports emerge lidar airports Our to the been across year. continuing applications as products in expect Tolling this and our the cases to and of are designed promising have into coming lidar significant United for we space. States solutions smart

turn I'll back it Next, to Hull.

Hull Xu

Mitch. Thank almost for quarter product million, $X.X third X% of revenue. XX% quarter our sequentially the results, consistent Starting year-over-year revenue you, with entirely was total and down and

product million, projects. sales up had was XX% revenue product the this year various due XXX% $X.X development to customers. quarter outstanding to timing of prior We and period Third by compared on driven minimal milestones increased revenue to planned quarter sequentially,

was a revenues result negative products from no as quarter for Our the of revenue being development slightly gross solely almost. and profit

less $X.X work supply Non-GAAP As $X.XX due elevated improved prior per product our XXX.X shares, loss costs Non-GAAP quarter include we Non-GAAP $XX.X diluted. compared $XX.X liabilities. share loss or was of the largely adjusted net remeasurement warrant earnout to for for shares both EBITDA third and the loss was and million basic chain of the liability outstanding diluted. basic compensation on was a million loss Weighted remeasurement quarter average stock-based revenue was and meaningfully, million our share million gross and net and margin component GAAP per shares $X.XX through constraints. as adjustments basic of million $X.X quarter, or to $X.X negative million million. diluted. on $XX.X

approximately and of liquidity purchase from $XX.X million $XXX Capital $XX As Lincoln $XXX of cash and the we short-term September of consists had remaining available commitment. XX, million equity in Total XXXX, million. liquidity approximately on million investments Park available

quarter first to signed in close of recently the liquidity from available of the increase $XXX million expected total Koito, at the transaction With our is XXXX. significantly investment

$X the million. On maintaining of our XXXX, million revenue $X we full-year guidance and prior are between

the million. expense side, $XX full-year our guidance $XX we and cost On maintain operating million between

the the summarize expected The key agreement approval. investment is XXXX, Koito. I'll Cepton to in subject of first the Lastly, to quarter close of terms with shareholder investment

Loan common be a VWAP or share one has paid repay part at price will sell convertible annual one Series approximately convertible to if A The $XXX represented of approximate X% corporate loan Conversion interest if annual X.XX% of a an XX-day $XX price secured be paid total carry X.XX% the investment convertible XX.X% is execution in the kind. an will general at rate of the fixed and agreement billion Cepton’s of VWAP cash with close year XXX,XXX a preferred transaction, JPYX.X Trinity the issuance entered stock. and or premium be stock shares The into a in $X,XXX of to stock a XX.X% after will a for premium of date of purposes. dividend rate for used at preferred loan conversion XX-day As the and or preferred will back to for agreement of Cepton million. term initial transaction. and stock beginning of each XX.X% to a $X.XXX term Cepton purchase the paid Currently, of price million. day The proceeds

our We towards are series wins. looking very OEM and forward appreciative production and of Koito’s to collaboration support additional continuous

to up open I'd the Now, for call questions. like

Operator

Instructions] your Morgan Chatterjee [Operator from question Chase. Samik comes Our J.P. state from question. first Please

Joe Cardoso

leverage that discussed, to this think Thank funding follow-up. the Hi. this investment is investment Koito you investors Can plan this third is relative My materializing $XXX for funding? from I And second first you investments? prior about How should specifically, And partner? this how on Yes. then different is on about to as them? the think And from the Chatterjee. Cardoso there question mark you. us help part then investment more you from to anything This of would is, Samik million. Joe have a future

Hull Xu

Hull. Joe. your is I'll this take question, So

right? So shares, awards. purposes, winning So is to essentially mean, primarily execute different As corporate Koito investments, Koito prior preferred How as to CPS, is bought I this they of going new how do production liquidity, so common prior it also investment? runway, be we plan shares. in series one to we terms on shares. the convertible their investments? award using And extend our so and it's subscribed the in common for from external

be to that's So convert preferred from one common year these eligible shares they're into and date. will convertible issuance the

Joe Cardoso

and future one I think partner? just funding should just, then just, and about you as that well. yes, -- then And of part But this know, the another have how was from last just investors

Jun Pei

will here, our Pei of This higher ultimate lead levels more operating latest lot and synergy, With for efficiency, savings customers. investment Maybe, question. collaboration including between Koito that cost have will much things Jun a into Yes. of certainly Cepton. this I'll take

the of Koito do I converging, expect from support road. will be all So down the actually things continued

Mitch Hourtienne

to extends this a runway we this quite Park that's obviously in also available Lincoln pending our facility addition bit, us. right? and still have Yes, transaction, for the And

we So in from near-term, investment additional or funding don't the Koito. fund expect

Joe Cardoso

your announced then peers question, space merger morning. a it. my second And this Got of two the just in

think hear an broadly, be a curious and/or consolidator? perspective? to even both to merger? a you touch to specific your too maybe industry thinking going see Cepton you. do maybe on industry about rule Just how consolidation from And then on And And see do early for it's consolidation you Thank more you're thoughts that then forward? Cepton

Jun Pei

Okay. in packed Well, there. a couple. lot of I'll Maybe miss questions

is here, even non-auto for I market And that your You is news, this can be continue questions. sense market non-auto seen. rather the Jun yet answer to effect Well, the appears make these follow-up consolidation that questions. it will market, though is the to to the fragmented. latest of with

area. I like But we on much focused the as and have For optimistic certainly opportunity this the our naturally our automotive future us, prices for what's But us, very remain very consolidations adoption well. the future We want of very in is we're biggest scaling We will end end market, competitive for promote be to will terms on but our really specifically possibilities? is -- eyes as lead this the our since automotive lidar the non-auto the believe automotive believe rather us about different. to for -- focus I Cepton, announcement into in We more pressure market is coming is And Well, from announcement, the infrastructure said, product key. into think the market we focus open, and our always more biggest that seen. any effect yet of to role reasonable expect you don't and the decade. this

Hull Xu

auto lidar the helps number market. that is know not You question too is, view view, right? terms know, early. We focused of it Ues, a actually in that adoption. is so your of very of addressing other you are least my market automotive driving early we that, companies it's Joe, think end know, consolidation, your There outside companies, market, -- our think other I your we at for is too of consolidation fragmented non-auto think, and part public

Joe Cardoso

Thanks. guys. all that color answering and very Thanks, question. the it. Appreciate No. long Appreciate

Hull Xu

Thank you.

Operator

Our Joseph comes Capital from question question. Please Markets. Spak state next RBC your from

Joseph Spak

quarter, of afternoon, we revenue everyone. up understand the sort A questions, developmental bit out couple maybe back the was a quarter-over-quarter. revenue the start actually quarter, good just to little in of Hi, better to Hull, to if then second

last about maybe think units. talked quarter XXX you I So

was took So is perhaps maybe in it some sequentially higher in some the ASP, -- for third or was there the of pricing units movement pressure? quarter some inflationary

Hull Xu

Joe. both, Yes, it's of a bit little

ship of the So in did units second quarter. units, more the the Also than second than higher in quarter terms third ASP quarter. we were

normal. one think was I significant had we shipment quarter our infrastructure slightly that Second fairly below

Joseph Spak

for pricing, that costs of taking seen the sort in is more that you've a some -- some that And Okay. mix issue is pricing that you are just or world? the of

Hull Xu

mix primarily It's issue. a

Joseph Spak

we quarter? reiterated things, A you the Okay. much if quarter the some developmental could got fourth and If implied margins effectively guidance, you couple gross any, which here. expect maybe we of look one, third do revenue, of in breakeven fourth get in You at how numbers sort the the quarter.

still that the fourth of I OpEx if and then exclude I talked about it? me positive potentially guidance past on And think remind was the sort $XX in wondering you just quarter. does in $XX million that's that the table? or on million, include SBC

Hull Xu

Yes.

we revenue. that fourth of So yes, expect for to some planning the includes milestones SBC achieved. development We're quarter, be and some do the

slightly of if the have on this it the factor become do some to slightly So it. of negative So more we gross gross of side, to inventory a terms as positive. kinks gross would into margin, and in the out work been some efficient we And out that, take all operational right? margin, we quarter's we positive then discounts were have that can also expect margin as on

Joseph Spak

I only it I like mean, was SBC that, it exactly at factors of only, this Is modestly for I know it those the sure some get but guess, I quarter. of don't we'll I'm that seems negative split right? Okay. time, mean, adjusting was

Hull Xu

Yes, it's negative. modestly very

Joseph Spak

Yes.

more lot I there's starting, I have next are auto. number -- you like Cruise right? the mentioned. about last digits, you as should I of talking [indiscernible], going you is from question my the the sort all there of than Ultra count GM It's obviously award, But and Jun, be sort you obviously year. but to non-auto opportunity unit that a know made think the which Okay. of as where on is, the you is sort infrastructure appreciate guess I or the potential

you hard giving So from units a $X get I in, and million ’XX evolve level, know next Because now, that the you're a the to at without you coming into how can ex-developmental not quarter high how going higher auto you guidance rate? run but maybe industry see your about it's revenue talk business to year? expect

Jun Pei

the when Yes. at like in through our they cusp industry This you the more would and very is everybody ago. It's breaking lidar actually with beginning have coming real, of the are where are than, I and the much even questions just where saw pictures real lidar actually this numbers natural guess, now year vehicles. in? to of compared more one

I and talk It So slowly, will moment, higher liberty will said at start for can sure, down start safety. a get not this But we're It's a lidar things surely level to autonomy everything. details as the numbers disclose form not and happening. bit for to is these nailed evolutionary the -- It's little of to will many be the actually past a we get that process in into having into -- vehicles. have just disclose. times, to at

Mitch Hourtienne

just Yes. I'll Joe, to Hourtienne. add this Jun’s is Mitch comment.

unilaterally continuing work expected this quarter, I as we they did of exact this continues platforms, know, up showcase that Yes, or and Cepton disclose you work contract work it's vehicle times. But completely low. to to you of GM, quarter vehicle But that this to was summer, agree the the can't, can the to it we're continuing classes. class value and So, our say on to safely to additional with platforms number continues and our you be [indiscernible] past overall vehicle going increase is we it cells well. vehicles, volume can't than on know, of begin kind Koito pretty those that which the this at different further luxury are

Joseph Spak

Okay. to hear. That's good

Mitch Hourtienne

market. made we've inroads smart on just in about point the what Yes, second mean your Yes, infrastructure smart that does for infrastructure?

we help place Koito production us However, Infra our lowering by that the situation. in cost costs having believe Smart some the line there's gain if with the look still delivery improving will market, traction automotive and at and sensitivities you market in

Joseph Spak

appreciate maybe sensitivity the Okay. when years? think of completely and you at can or get follow-up Cepton as you're the that high just level a be to here a a specific at I to over to do the couple you level, position guess market that a announce next looks educate point, better going of to I But at your how color of of partners. as least sort what with to on all in bit sort the little trajectory

Jun Pei

Hey, Joe.

the beginning for automotive, went think ship -- think provide in when of that year, able first color. in and I much at quarter, I more have next summary units think, we'll units help? for terms be of you to update, next the will more our the even full-year this as Does of probably if into we year able be unit But will volume, twice as we we to year. shipped now,

Joseph Spak

Okay. But for infrastructure?

Jun Pei

For automotive?

Joseph Spak

that, right, But shipping can me help So -- for serial what because you're product? understand isn't automotive you

Jun Pei

right? and year. Yes. is next Well, have for production Cruise SOP to supply Koito, already And Koito Start purchase we next GM year, we supply because from program. the is to XXXX up Ultra orders

Joseph Spak

Okay.

there issue time lead of quarter a which or think how about a what is So should there's that? you're -- saying we or so

Jun Pei

of a quarters. It’s couple

Joseph Spak

Couple of quarters.

that. you. appreciate I Thank Okay,

Jun Pei

Yes.

Operator

question Gus from next state Securities. question. Our Please Richard Northland your comes from

Gus Richard

for Thanks the taking Yes. question.

focus on that competitive comment they're ADAS OEMs the a changes than for made earlier specifications the position? looking you in wondering that think call your that was how I just more starting autonomy. I are in to

Hull Xu

of public, Japanese just years working and with ARCO or think ADAS couple General Ford, they you spent it's That focus. our we've increasing the four time their wind then much definitely We've what Motors, of working Yes, said into market Ford investments about with know in the as OEMs. they're down three specifically. spent I plays announced

LX specs, Yes, some cases, opportunities. -- thing But opportunities for really So it's range, our the good they now, have portfolio, that LX. a product definitely. has meters immediate short-term space good our thing the XXX in focus AV require is longer our for XXX, to shift a tech the our we LX can plus support right in

Jun Pei

getting very just get you to is the in ADAS is not see far, beginning want the the a to whatever specifications. I And to key from you the to for specification on with the field, focus here. on how Jun add this Gus, only design see that performance Yes. of resolution. terms that part having get

part. this You also vehicle a safety everyday have consider to is automotive

got to the mention, to hit reliability. you have cost not also, to target. So you the where have And ask you

we ourselves the spot past So mentioned as of key always one Cepton balances capture hit where that sweet the fundamentals and the the technology were have -- the we win. actually design promoted MMT these we in from and that's

happy volume. AVs that's ADAS rather are And work actually So on to here different. something spec large to to are going yes, for be the scaled versus a we

Hull Xu

seen OEM one our address the deployment. anecdote, we've polling And I'll industry trend. as in We've to Gus add and the Yes. this then just we timeline seen for RFIs FUSE,

that So I is is, top OEM OEM. which but XX global can't a share

Gus Richard

And Yes. process next that the You that activities Got was look mean? leads you what you moved from And OEMs? two exactly I'm added What these the OEMs to that just what does there with you it you the like? mentioned, question actually know, RFQ. does wondering, are it. to RFI me know, had two

Hull Xu

Yes. I for these worked OEMs we've are years. multiple two mean, with

solidifying commercials, collection rubber been Whereas those activities, car, integration phase. more the now years does about target the the it have elements the nailing where may down that's schedule done they about go proof-of-concept all just committed really in part the that of have and vehicle it's RFI commercial. planned. timing. ago stamp data it's a for RFQ, the vehicles That's on on exact you in few specification exact a more launch So a all cost, --

Gus Richard

at somebody -- your that think it. of to give stands answer. Got very where a sense was question, us helpful. Got one And it. a overall this contract the then like point? you I value Can won't ask last nobody That's you

Jun Pei

Yes.

the this our point. well that, $X Ultra program we based befor the with own contract. GM that for on estimates, billion fairly which will It’s conservative answer over current We at Cruise, is

Gus Richard

projects? existing With

Jun Pei

vehicles. awarded that awarded existing -- With

Gus Richard

with of Got big two how And, be? sense these know, working OEMs, it. could those contracts Got you're it. any you

Hull Xu

-- same at one the will They larger. same least of them will be or be the

Gus Richard

Alright, it. you so good. Got much. Thank Perfect. very

Jun Pei

Thanks. Yes.

Operator

Galinko next your Our question comes Maxim state from from Please question. Group. Matthew

Matthew Galinko

Hey, Hull.

Hull Xu

Matt Hey,

Matthew Galinko

Thank funding the you another preferred just of, questions sort question. allow does and you on you're the I nurture building for But some way congrats asking shares, of automotive. the guess, in on maybe taking of my investment the a little and expand you're bit more seeing? to fairly you side more the you opportunistic talk to a is just more connection be with non-automotive OEMs? about, automotive activity engage to Or there direct can allow on or

Hull Xu

Yes, I'd say also on infrastructure and both, We to that on programs real the valid right. and side opportunistic see We remain side. there's real in pretty deployments see want near-term. to smart want we that profitability

on even as -- automotive accelerate automotive you meet needs the of to OEMs more side recent need increase resources do they timeline ADAS, focus the and the For focused as everything. on us focus of to see and the to actually on we things, to can

of these give do all So to resources lot a things. more does financially this us

Matthew Galinko

a does a was a it competitive at now. seem today? little their award? dynamic years -- more Or just feel on the focused it ago, today refocusing what follow-up then with working non-lidar, Thank you competitive know, is when I Got whether were ADAS. competitive guess environment to of within landscape, Any OEMs, you. option my automotive the comments OEMs you lidar, have might to it. sensor lidar And or that the towards on Is is, respect than the GM it's disposal couple it like changes

Mitch Hourtienne

couple want say that still one, in is ago, count it's becoming a of never I less always hand you two I competitive it companies. now one can competitive. to But Mitch, was even This so automotive. on versus Matt. dozen can years Sure. the number is It's competitors start

top down XX it's one maybe definitely companies. you couple just when to companies, of talk a hand, about So automotive

Jun Pei

say And know, Yes. only time. that you get, track also track record see can I'd execution, that you OEMs record with right? to want of

been design basically So to handful statement companies is few have will of over design continue time. less and kind able of a outgoing of only of to of lidar companies it execute And number is, automotive with on already programs of niches, you're wins part real that number competitors automotive seeing has because becoming OEM the the wins.

Matthew Galinko

it. Thank you. Got

Operator

Shannon from from question. your state Our question Hallum comes Richard Craig next Group. Capital Please

Richard Shannon

for Hi, well. guys. Thanks questions my as taking

the completed I the what to are? And the what those going follow-up competitors topic you remaining you still Do in any I'm know talk are processes? on -- two processes RFQ? what if RFI can move think of to on that they about

Mitch Hourtienne

Richard, Mitch. this is Hey Yes.

Just to clarify, your they said, are? competitors first You we know what's question? do are what what

Richard Shannon

Yes, many know how do you competitors?

Mitch Hourtienne

Yes, of competitors we know exactly at each the three. the

So is other competitors. three no or And there's one two, the two there of three, the competitors.

Richard Shannon

little the fit? OEM bit mean? added that engagement please? how is does Okay. bullet a that release top Alright, great. you fit a What that nomenclature you is second stage. Is you mean, talked Where describe that That's helpful. And more, new does And question a can do to then that in RFI, from other RFQ? the here the automotive about press advanced XX program

Mitch Hourtienne

Yes.

very I And thought competitor. one actually past or that from with us a in discovered our is where QX the So we that that that's familiar a engagements. on really part outcept came mentioned in there to isn't QX. They that new opportunity one

really and And commercials timing. no -- there there isn't it's just is so updated phase, RFI

Jun Pei

our Richard, Yes. you means just other we we remember advanced very -- have awarded. then categories, advanced if back engagement when the forecast, have advanced engagement to right? close So and shared we being less different awarded,

Richard Shannon

Perfect then. Okay.

for that's much. all Thank guys. I you think very me

Operator

[Operator this we questions. Instructions] further no have time, At

Jun Pei

Okay.

and will conference. us and our in it's Cepton industry, are the exciting we'll a we happening continue on landscape, progress questions. time your We thank is report lot automotive today's Certainly, in and joining you execute and all focused an So appreciate of well things the talk for quarter. again continuing to

Mitch Hourtienne

Thank you, Erica.

Operator

call. for you Thank conference today's concludes attending. This

Cepton (CPTN) 11 Nov 222022 Q3 Earnings call transcript